In the contemporary marketplace, technical analysis is king. Subsequently, having a working knowledge of forex charts analysis and how to read forex chart patterns is invaluable to the modern currency market participant. Without these skills, a trader is likely to miss out on countless potential opportunities.
When approaching the forex from a technical perspective, the pricing chart is the window to the marketplace. In contrast to the graph paper of decades past, advanced software trading platforms automatically chart pricing data at the user's direction. From intraday Japanese candlestick charts to weekly Open High Low Close (OHLC) price bars, the only limit of forex charts analysis lies within the imagination of the trader.
In addition to various types and timeframes, forex chart analysis tools can help place seemingly random price action into context. Their functionality is extremely useful, as unexpected volatility can make once orderly markets appear disjointed. Fortunately for active traders, a multitude of forex chart analysis tools and indicators are now readily available for implementation. A few of the most popular are Fibonacci retracements/projections, moving averages, momentum oscillators and forex chart patterns.
When it comes to technical analysis, learning how to read forex chart patterns is essential. Patterns come in a variety of forms, each relaying unique information to the trader. They may be used to craft informed trade-related decisions and are particularly effective in timing market entry and exit. From scrutinising trend strength and potential continuation to anticipating reversals, forex chart patterns are powerful indicators.
As with almost everything market-oriented, forex trading chart analysis functions best within the context of a comprehensive strategy. The structure provided by a detailed plan can help to augment the effectiveness of any forex chart or indicator. Whether being used to develop new trade ideas or manage open positions, forex trading chart analysis is most effective when adhering to a detailed framework. No matter the level of sophistication, chart analysis can bring value to your approach to the global currency markets.
The combination of leverage, volatility and liquidity make the forex attractive to many individuals. However, trading currency pairs on margin involves the risk of financial loss. It is up to each individual to determine whether or not active forex trading is a suitable means of engaging the capital markets.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.